Empty High Street

The government has been warned that unless it makes radical changes to the business rates system, businesses could face a 60% rate of tax by 2022.

In a joint response to the government’s review of business rates, the British Property Federation (BPF) and British Council of Shopping Centres (BCSC) claims rates were massively “out-of-kilter” with rental values, which have grown only 5% since 2000 and remain lower than their 2007 high. 

They submitted research by rating surveyors suggesting the business rates multiplier applying after the 2017 business rates revaluation would represent a tax rate of over 50%, which is likely to increase to nearly 60% by 2022.

The multiplier, which determines how high the business rates bill will be, is currently set at 49.3%. 

The bodies said such a high tax rate would pile additional pressure on rents and further discourage additional investment in real estate, particularly in marginal towns.

The response also recommends a series of administrative changes to increase the predictability and transparency of the system in the short-term, including a more streamlined appeals system, exploring the potential for a central collection/billing point and greater use of online tax compliance. 

“The market in which these businesses operate is changing faster than ever and a tax system that reflects these fluctuations is critical,” said Edward Cooke, director of policy and public affairs at the BCSC.

“In order to ensure that the business rates system is fair, government must ensure that the rates system takes account of these changes, said  Melanie Leech, chief executive of the British Property Federation. “Failure to do so could mean the UK missing out on investment, with longer term risks for the competitiveness of our economy.”